Obama administration pushes banks to make home loans to people with weaker credit
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.
“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
More at WaPo
Want more people to be able to afford home ownership? Perhaps stimulating an economy that produces good paying jobs instead of low paying part time and full time ones supplemented by food stamps would be a good place to start. For that, good old Classic liberal economics rules supreme. But when you have Keynesian (i.e neo-Marxist) economics put into practice, that’s what you get- low paying jobs, dependency on government handouts, and mountains of debt to go along with it.
It looks like somebody else is about to have their own sort of “financial crisis” for a change. “The Panama Papers” is being described as “the biggest data leak in history.” It may also prove to be one of the most explosive.
From the NY Times, April 4: Here’s What We Know About the ‘Panama Papers’
Vladimir Putin could be toast. It has been revealed how he tried to insulate himself as he stashed away billions. What happens probably depends on how tightly he can control the media. China is already trying to lock down the story.
The Bernie Sanders campaign may soon be gaining momentum with the help of a very strong tailwind. The names and details revealed could conceivably bring down politicians, political parties, and governments. It will be interesting to see who got caught when somebody suddenly turned on the lights.
Didn’t the Democrats do this before? Didn’t that cause the crisis of 2008? Looks like Obama’s last effort to trash the country.
@Randy: If at first you dont succeed, throw away more taxpayer dollars.
Yeah, right. Vlad has a compliant, servile media that will, at his behest, make sure unflattering information will remain nice and buried… just as the US media does for liberals here.
Bernie’s momentum is supplied by Hillary’s corrupt nature.
@Randy: There will always be a Republican administration around the corner to blame the disaster on.